The Financial side of RCL/Celebrity

[Canuker]

As RCL shares continue to tumble, I found this website with interesting info on the company:

 

http://www.wikinvest.com/stock/Royal_Caribbean_Cruises_(RCL)

 

Take a guess, for example, on the raio of "ticket revenue" to "on-board revenue".

Onboard revenue is 36% of ticket revenue. I knew it was high, but I didn't think it was that high. And because it's all 'gravy' it has a very high profit margin. They want your on-board dollars.

 

Average revenue per passenger: $1,452. Keep in mind that this figure won't include taxes or port charges, airfare, etc.

 

They're about half the size of the Carnival group, with about 23% of the total, global market share. About 16 million people get on cruise ships every year.

[Cruising Greek]

As RCL shares continue to tumble, I found this website with interesting info on the company:

 

http://www.wikinvest.com/stock/Royal_Caribbean_Cruises_(RCL)

 

Take a guess, for example, on the raio of "ticket revenue" to "on-board revenue".

Onboard revenue is 36% of ticket revenue. I knew it was high, but I didn't think it was that high. And because it's all 'gravy' it has a very high profit margin. They want your on-board dollars.

 

Average revenue per passenger: $1,452. Keep in mind that this figure won't include taxes or port charges, airfare, etc.

 

They're about half the size of the Carnival group, with about 23% of the total, global market share. About 16 million people get on cruise ships every year.

 

Thanks for that link! I found this information really interesting. Is there any company that can effectively compete with Carnival? It would seem to be a pretty daunting task, given the imbalance in their relative market shares. Almost like the Microsoft of the cruise industry...

[Gonzo70]

Hopefully they will be able to handle the ever rising fuel costs (and indirectly as a result of this increased food costs). There is only so much they can pass on to the consumer without losing business. If oil does not level off or drop back some, I am concerned they may be in some trouble (at least their stock) for some time.

[claud925]

Well, considering that I was elite CC who traveled solo in suites and generated onboard revenue that averaged between 40-60% of my ticket (I really enjoyed the casino and lounges), I hope they miss my patronage. . . :D

[zalusky]

Hopefully they will be able to handle the ever rising fuel costs (and indirectly as a result of this increased food costs). There is only so much they can pass on to the consumer without losing business. If oil does not level off or drop back some, I am concerned they may be in some trouble (at least their stock) for some time.

 

You know the price of oil is an interesting thought. I have heard that the bulk of Oil price increase is not due to oil itself but that the value of the dollar has plummeted. They say that the price of fuel in europe has not increased that much. I would expect most cruise lines to purchase fuel in a different currency.

 

Now what is a problem is US passengers purchasing with US dollars. The tips we pay at $10.50 per day are dramatically lower in value than they were a few years to the people that receive them and send them back home.

[FinelyCruising]

There was a piece last week about Carnival in the paper indicating the projections are expected to be $90. per share in the next five years, the current pricing at or below the post 9/11 amounts.

 

Interesting stuff.

[Gonzo70]

There was a piece last week about Carnival in the paper indicating the projections are expected to be $90. per share in the next five years, the current pricing at or below the post 9/11 amounts.

 

Interesting stuff.

 

If they do a reverse stock split that might just happen.

[kcb]

Well, considering that I was elite CC who traveled solo in suites and generated onboard revenue that averaged between 40-60% of my ticket (I really enjoyed the casino and lounges), I hope they miss my patronage. . .

 

Oh wait, let me guess, more Smoking Policy commentary? :rolleyes:

[Davey Interweb]

It was nearly a year and a half ago, but I had bought enough shares in RCL to earn the OBC, and then promptly unloaded them. I enjoy cruising, but I don't see it as a growth market so much anymore.

[zalusky]

Same here and I actually bought CCL and RCCL stock and lost more than any cruise credit would have been worth.

 

Just like the ariline credit cards it actually costs more and restricts you more in the long run.

 

With the stock you lose value, investment opportunities and can't mix it with other onboard credit. Until oil prices change, I don't see the stock rebounding much.

 

With the credit cards you have pay big bucks to get anything, in addition to co-pays, or yearly fees and then there are plenty of restrictions.

 

It's better to get future cruise credit instead and just look for the best air deals independently.

[chessbriar]

With the stock you lose value, investment opportunities and can't mix it with other onboard credit.

I have mixed the Stock OBC with Future Booking OBC and Credit Card OBC. My highest OBC to date going onto a cruise was in the neighborhood of $1000

[wolfganghowell]

You can mix the stockholder with any other credit. For example, our last cruise we had a $500 gift certificate from family, our $100 stock credit, our fuel surcharge reimbursement of $70 and $150 from our RCCL credit card. $820 in credits. :) We also had the balcony C&A discount on the original booking. We've also used OBC for booking onboard in the past and various coupons as well - Stockholder credits are entirely separate from all other possible credits you receive.

[Karynanne]

We did a B2B for a total of 29 days on Mercury. I redeemed by Celebrity Visa and AMEX points for a total of $1250, had Shareholders credit of $500, then had TA credit of $300., and then had our fuel charges refunded for a total of $140.

 

For the full 29 days we had, $2190. This was divided between the 2 cruises.

[Deeliteful]

It's no wonder the cruise lines are moving more ships to Europe. We expect to pay more and we DO pay more!

[MMDown Under]

The website listed has a similiar article on the financial side of Carnival, which is also most interesting.

[floridatravelersforlife]

It's curious that three years ago I was watching the President of RCCL on CNBC and he answered a question on fuel oil, before the oil price rises began after Hurricane Katrina. He said " fuel oil is a minor component in running a ship". so if you extrapolate minor times 150%, it's still small. I think its the exchange rate and deminished patronage that is hurting the industry.

[raudacruise]

Some observations:

 

Prices from European travel agents for the same cruise/cabin are much higher than in the US when compared $ vs. Euro vs. Pound. Sometimes the Euro is treated almost on par with dollar. Some cruise lines strictly forbid US travel agents to sell outside the US and Canada. Not sure about RCL. Seems like the euro/pound income could be used for:

 

ANY commodity can be hedged. Hedging is not a bad thing, it simply means buying futures to lock in prices. Don't confuse it with hedge funds. The cost for future fuel could easily be locked in without paying for the total up front. Add the cost to the formula to determine cabin pricing and -poof- the surchage goes away.

 

Now comes the fun part. Food prices are increasing faster than oil prices right now. I'm sure the cruise lines have some locked in contracts but for how long given how stable that factor has been in the past.

 

Can you say "food surcharge".

[MMDown Under]

If there was a food surcharge, I doubt there would still be a cruise industry. :)

 

Yet, you are correct re the escalating price of food worldwide and the effect this is going to have on the cruise industry.

 

Maybe that is why cruisers are commenting on food on Celebrity not being as good as it used to be. Cruiselines trying to stretch their food $.

 

I think what is going to really effect the cruise industry is the recession, except for the high end cruisers, who haven't lost their money in the worldwide sub-prime market crash.

 

I suspect that is why cruiselines are repositioning some ships to new destinations to attract new customers and spread the risk.

[blong2200]

I also have read where Carnival is raising their Fuel supplement to $7.00 per passenger per day! How long before Celebrity and all others will follow?

 

I certainly hope if they raise the fuel supplement, they will a better job of notifying than they have done in the past.

[MMDown Under]

I am currently paying a fuel supplement of $7Aus per day for MSC Cruises ($126 x 2 for an 18 night cruise).

[Gonzo70]

Can you say "food surcharge".

 

True food costs are rising, but much of it is directly or indirectly related to the rising price of oil. I think that the fuel surcharges already encompass the rising food costs. There is a limit to how many surcharges an industry can pass on to its consumers before consumers look elsewhere to spend their money. Food surcharges are virtually unheard of and I think a cruise line would stand to lose more than it would gain by imposing a food surcharge in addition to a fuel surcharge.

[Coco Creek]

Please let's not lose sight of the cost of money--the higher interest rates being paid by RCL given the "junk" status of their debt. This is going to continue to squeeze and squeeze as the Solstice and Genesis class ships are financed.